Insights 
VT 
Gold price surged for the third consecutive day following the Israel-Iran conflict, which caused a shift towards risk aversion in financial markets. XAU/USD is currently trading at $3,422, up over 1%. The tensions were heightened by Israel’s assault on Iran’s military targets, causing regional instability. XAU/USD hit a five-week high of $3,446 before slightly retracting as traders secured profits.
US inflation continues to decline, as shown by recent Consumer Price Index (CPI) and Producer Price Index (PPI) data. A University of Michigan survey reflected growing optimism but lingering concerns over rising prices. The US administration has cautioned Iran regarding its nuclear activities, attributing the conflict to Iran’s actions.
Upcoming Federal Reserve Policy Meeting
Attention will turn to the Federal Reserve’s upcoming monetary policy meeting, which will feature updated economic forecasts. Key economic indicators such as Retail Sales, Industrial Production, housing, and job data may impact Gold’s path.
Gold is predicted to surpass $3,450, supported by the Relative Strength Index (RSI), which shows a bullish trend. A drop below $3,450 may find support at $3,400, then at the 50-day Simple Moving Average (SMA) of $3,281.
Gold acts as a safeguard during crises and against inflation and currency devaluation. In 2022, central banks bolstered their reserves by 1,136 tonnes of Gold, valued at roughly $70 billion, marking their largest annual accumulation. Gold usually moves inversely with the US Dollar and Treasuries, gaining value when interest rates are low. The US Dollar’s trends continue to affect Gold prices.
With Gold prices climbing for a third straight session amid renewed geopolitical tensions, the metal is reaffirming its role as a store of value during uncertain times. Following Israel’s strike on Iranian military assets, market sentiment leaned heavily towards safety, resulting in a marked increase in demand for non-yielding assets. As a consequence, the XAU/USD pair reached levels not seen in over a month, brushing against $3,446 before shedding a few dollars as positioning was pared back. These profit-taking behaviours are routine, especially after multi-day gains, and don’t necessarily reflect waning bullishness.
Investor Sentiment and Market Dynamics
The recent softening in US inflation metrics, particularly the CPI and PPI, adds a new layer here. While price growth is easing somewhat, inflation remains well above the Federal Reserve’s long-term comfort threshold. The University of Michigan’s consumer sentiment survey suggests people are feeling slightly better about the direction of the economy, although concerns about purchasing power persist. There’s a narrowing window for policymakers to act without deepening market unease.
The Fed’s upcoming meeting, along with the fresh batch of economic projections, will be very telling. We’ll be watching for changes in tone or outlook, especially as new figures on consumer spending, hiring, and industrial activity emerge. These will directly feed into market expectations over how long the current rate levels may be held, or if the central bank chooses delay in its easing cycle. Gold, as a non-yielding asset, benefits when rate expectations begin to slide.
Technically, the outlook suggests another move higher is on the cards if bullish pressure continues. RSI levels imply that buyers remain firmly in control, and should the price break convincingly above $3,450, we would look towards even higher levels thereafter. Conversely, any retreat may find a cushion at $3,400, followed by a deeper level of support around the 50-day SMA at $3,281. For those managing exposure, these thresholds can guide entries and exits with more clarity.
Central banks, it must be recalled, accumulated vast amounts of Gold in 2022, underlining sustained confidence in the metal. With over a thousand tonnes added to reserves in that year, many of these institutions were clearly positioning for long-term resilience rather than short-term profit. The strategy was not shaped by inflation alone but also by shifting attitudes towards the Dollar and sovereign debt obligations.
Gold’s traditional inverse relationship with the US Dollar and Treasury yields is very much intact. Should rate expectations soften further, we would expect the Dollar to lose some footing, adding further upward pressure to XAU/USD. For traders looking beyond immediate headlines, this dynamic remains one of the more reliable pivots to observe.
In the coming weeks, it will be important to remain responsive rather than reactive. The geopolitical backdrop may remain tense, but it’s the interplay with monetary policy and broader economic reports that will offer clearer trading cues. As always, sudden movements offer opportunities but also the risk of misjudgement. We will maintain close attention to how these separate threads align.
